As Rep. Wexler departs, his curious $150,000 campaign bet goes bust

South Florida U.S. Rep. Robert Wexler’s 13-year sojourn in Congress is almost over, but his campaign – or rather his campaign’s fat bank account – will run on indefinitely.

But the Wexler campaign’s final takeaway is likely to be lighter than the congressman expects. The reason: the apparent total loss of Wexler’s unusual and secretive investment of $150,000 in campaign funds in a business associate’s real estate company.

Records show that Wexler’s campaign had nearly $1 million cash on hand at the end of September. And by the time the congressman finishes paying bills, handing out staff bonuses and contributing to fellow Democrats his campaign will finish with about $700,000, his chief of staff said.

“He hasn’t decided what to do with the rest of it and wants to keep his options open. It will be there for him if he wants the option of returning to public service,” said Eric Johnson.

Most members of Congress keep their campaign money in the bank or in stocks and bonds. Wexler, who leaves office Sunday, used campaign funds to place a big bet on real estate in March 2004, Palm Beach records show.

Until the mid-1990s, candidates for federal office were required to keep campaign funds in a federally insured bank account. But in a series of advisory opinions, the Federal Election Commission gradually changed the rules to allow campaigns to invest surplus funds as candidates see fit.

“But I don’t recall anyone investing in real estate before with campaign funds,” said a Washington election law attorney who asked not to be named.

The Wexler campaign, which took back a $150,000 mortgage and promissory note to secure its 2004 investment, did not report the transaction on its disclosure reports to the FEC. Among other things, the FEC requires campaigns to report all “debts and obligations owed to” them.

According to Johnson, the $150,000 was invested in Capital Gains Real Estate Consultants, a company whose principal owner is Roy Amico, a stock broker who managed some of the Wexler campaign’s money. FEC regulations require candidates to disclose where they keep their campaign funds — and to notify the agency of any new depositories within 10 days. The Wexler campaign filed no report with the FEC identifying Capital Gains Real Estate Consultants as a depository of campaign funds, but does name the company as a source of interest income in other reports.

Now, the $150,000 appears to have evaporated with Amico’s Chapter 7 bankruptcy filing on Oct. 15 – one day after Wexler’s surprise announcement that he was quitting Congress to head up a Middle East think tank.

Amico’s statement of financial affairs filed with the court says his assets include a 45 percent stake in Capital Gains Real Estate Consultants. Amico reported the company to be active, but state corporate records say it was administratively dissolved in September 2008.

Bankruptcy trustee Deborah Menotte told Judge Paul Hyman last month that a search has turned up nothing to distribute to Amico’s creditors. His $1.9 million in debts are set to be discharged next month. The Wexler campaign is not listed as a creditor.

Says Johnson, “He didn’t respond to some of our letters as to how he was going to get us the money back…I wasn’t aware he went Chapter 7. Clearly, it’s not going to help our cause.”

Neither of the Amico brothers could be reached for comment. Plante said Capital Gains is defunct, and that there is no money.

“It doesn’t look good for the campaign,” said Plante, who was a consultant to Wexler when he first won election to the House in 1996.

The Wexler campaign has little recourse. Last year, it released the mortgage it held as collateral on a waterfront home on South Flagler Drive in West Palm Beach after the property fell into foreclosure. The parcel was purchased by the Amico brothers for $975,000 in January 2004.

During Wexler’s re-election campaign last year Republican opponent Ed Lynch posted information about the transaction on the website wexlersweb.com.

Another Wexler opponent, former Broward commissioner Ben Graber, complained about it to the House Ethics Committee. Graber, who characterizes the transaction as a “sweetheart loan” for a friend, said he never heard back from the committee.

Lynch and Graber are among six candidates now vying to replace Wexler, whose district runs from West Palm Beach to Pompano Beach.

Jim McCormick is running as an independent. The general election is April 13.

Roy Amico was at the center of another controversy involving the Wexler campaign last year.

Amico is a former stockbroker with Fort Lauderdale’s Newbridge Securities. For years, the Wexler campaign listed Newbridge as a source of investment income or loss on its reports to the FEC.

But in late July 2008, campaign officials amended 25 disclosure reports dating to 2001 to remove Newbridge’s name and replace it with other firms.

Johnson said the changes were made to properly identify the firms Amico was affiliated with after he left Newbridge in 2002.

On July 25, two days after the campaign began amending its reports, the Securities and Exchange Commission accused Newbridge and its top executives of failing to reasonably supervise a broker who was allegedly manipulating penny stocks.

One of those charged executives was Newbridge president and co-owner Guy Amico, the brother of Roy and Armand Amico.

In June 2009, the SEC barred Guy Amico from supervising any broker or dealer for two years and ordered him to pay a $79,000 civil penalty. He is appealing that order.

Wm. F. Hirschman/December 29, 2009

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Jeff/January 1, 2010

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